Homes are responsible for around a quarter of the UK's carbon emissions and one family in every four lives in fuel poverty. So big cuts, in carbon and in bills, need to be made.

Energy efficiency is the key to achieving this: we can save energy, cut carbon emissions, and cut energy bills. But Britain's homes are among the most energy-inefficient in Europe.

Why do millions of families not have enough insulation? When the Conservatives looked into why Britain's homeowners weren't falling over themselves to make their homes warmer, we found good reasons for their inaction: not knowing where to start; not having a trusted supplier to carry out the work; and not having the cash to pay for the upfront costs.

They then get an entitlement to have these improvements carried out immediately by a kite-marked installer at no upfront cost. The cost of the work is repaid over 25 years via the home's energy bills.

The assessment will ensure that the measures carried out will be those where savings in energy bills are greater than the cost of repaying the amount borrowed. That means that families will be able to make their homes more efficient, pay back the cost over time, and still save money from day one.

Yesterday we took this policy a step further. We announced that the mayor of London and 14 local councils, covering between them more than 6m homes, have agreed to pilot our green deal scheme should a Conservative government be elected next year.

Importantly, these local authorities have local expertise and knowledge, and will help us to roll the green deal out on a street-by-street basis, targeting first those people most in need of cutting their fuel bills and heating their homes.

As well as helping more families, a properly national scheme has other advantages. It could directly create 36,000 jobs in installing and surveying, with a further 42,000 jobs indirectly created in the energy efficiency supply chain. And because we are committed to apprenticeships, we will ensure one in 10 of the new direct jobs created by the green deal are to be "green apprenticeships" – over 3,500 new apprenticeships in total.

There are currently thousands of people unemployed and claiming benefits whose usual occupation is in the skilled construction and building trades – many of whom could, with little or no further training, work on a domestic energy efficiency scheme. I believe that over the next few years this approach could open up a new competitive market helping to employ many of these workers, and to update their skills for the low carbon future.

Recently, the government has begun to see how important the green deal is. But the "pay-as-you-save" scheme they have announced will only help 500 families over two years. It shows a terrible lack of ambition. Every household in the country should benefit from energy efficiency improvements, but the government wants to limit help to just 500 homes.

A scheme which helps families and creates jobs is exactly the kind of positive vision for a low carbon economy Britain needs. It's time every family in Britain had the chance to benefit from the green deal.